FOREX-Euro gains as bank relief offsets ECB stimulus

    * Bank relief seen reducing FX impact of ECB stimulus
    * U.S. retail sales increased more than expected in August

 (New throughout, updates trading and comments to U.S. market
open, new byline, changes dateline, previous LONDON)
    By Karen Brettell
    NEW YORK, Sept 13 (Reuters) - The euro gained against the
dollar on Friday for the second day after the European Central
Bank on Thursday exempted euro zone banks from a penalty charge,
which analysts say will reduce the currency impact of new
    The ECB on Thursday cut its deposit rate to a record low
-0.5% from -0.4% and said it will restart bond purchases of 20
billion euros a month from November. The purchases will run for
as long as necessary and end shortly before it starts raising
the key ECB interest rates.
    It also said that euro zone banks will be exempted from
paying a penalty charge on idle cash worth six times their
mandatory reserves.
    “Cutting the deposit rate and introducing 'tiering' at the
same time was likely to have a mixed impact on the EUR and that
seems to be one of the reasons why the weakness in EURUSD on
Thursday reversed abruptly,” Stephen Gallo, European head of FX
strategy at BMO Capital Markets said in a report on Friday.
    The single currency initially dropped on the new stimulus,
testing more than two-year lows, before dramatically changing
    By exempting banks from the penalty charge the ECB aims to
minimize stress in financial institutions that have been harmed
by years of low rates.
    “Tiering aims to protect the credit transmission channel,
but reduces the FX impact of lower interest rates,” Morgan
Stanley analysts said in a report.
    The euro was last up 0.20% at $1.1083 The single
currency fell as low as $1.0925 immediately after the ECB
decision on Thursday.
    Short covering as the euro failed to break below that level,
and hopes of de-escalation in the U.S.-China trade war also
helped turn the euro around after the ECB decision.
    President Donald Trump said on Thursday he preferred a
comprehensive trade deal with China but did not rule out the
possibility of an interim pact, even as he said an "easy"
agreement would not be possible.
    Data on Friday showed that U.S. retail sales increased more
than expected in August, pointing to solid consumer spending
that should continue to support a moderate pace of economic
    That comes after better-than-expected producer price
inflation data on Wednesday and consumer price data on Thursday.

    The improving indicators are unlikely to sway the Federal
Reserve from cutting interest rates when it meets next week.
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1083        $1.1061     +0.20%         -3.37%      +1.1109     +1.1056
 Dollar/Yen       JPY=        108.1000       108.0900    +0.01%         -1.96%      +108.2600   +107.9300
 Euro/Yen         EURJPY=     119.85         119.59      +0.22%         -5.05%      +120.0000   +119.5900
 Dollar/Swiss     CHF=        0.9876         0.9902      -0.26%         +0.63%      +0.9908     +0.9855
 Sterling/Dollar  GBP=        1.2455         1.2332      +1.00%         -2.37%      +1.2476     +1.2328
 Dollar/Canadian  CAD=        1.3222         1.3209      +0.10%         -3.04%      +1.3241     +1.3206
 Australian/Doll  AUD=        0.6873         0.6866      +0.10%         -2.50%      +0.6882     +0.6860
 Euro/Swiss       EURCHF=     1.0950         1.0955      -0.05%         -2.70%      +1.0970     +1.0936
 Euro/Sterling    EURGBP=     0.8897         0.8969      -0.80%         -0.97%      +0.8975     +0.8895
 NZ               NZD=        0.6384         0.6403      -0.30%         -4.96%      +0.6409     +0.6377
 Dollar/Norway    NOK=        8.9593         8.9671      -0.09%         +3.71%      +8.9811     +8.9386
 Euro/Norway      EURNOK=     9.9311         9.9236      +0.08%         +0.25%      +9.9600     +9.9151
 Dollar/Sweden    SEK=        9.6109         9.6220      +0.06%         +7.22%      +9.6336     +9.5850
 Euro/Sweden      EURSEK=     10.6545        10.6478     +0.06%         +3.80%      +10.6775    +10.6290
 (Reporting by Karen Brettell; Editing by Andrea Ricci)